Key Takeaways:
- Your deposits are automatically protected up to the limit at insured banks.
- The standard limit is $250,000 per depositor, per ownership category, per bank.
- Use ownership categories and multiple banks to maximize coverage.
- FDIC insurance only protects deposit accounts.
What is FDIC Insurance & How Does it Work?
Federal Deposit Insurance Corporation (FDIC) insurance is a U.S. government-backed guarantee that protects your money in checking, savings and other deposit accounts in the rare event that the insured bank you are keeping your money in fails. The coverage limit is currently $250,000 per depositor, per insured bank, for each ownership category.
FDIC insurance is automatic, meaning you don’t need to purchase the insurance when you open a deposit account. Upon account opening, your balance is automatically insured. Not all banks have FDIC insurance, but most U.S. banks are required to have it.
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government. Created in 1933 during the Great Depression, the FDIC was founded to insure bank deposits in case the bank failed. The FDIC was established to increase the public’s trust in the banking system.
What Types of Accounts Does FDIC Insurance Cover?
The FDIC covers standard consumer and business deposit accounts at insured institutions. The types of accounts that are eligible for FDIC insurance include:
- Checking Accounts: Bank accounts used for everyday expenses.
- Personal Savings and Business Savings: Accounts designed for growing your money while keeping it accessible.
- Personal CD (Certificate of Deposits) and Business CD: A savings account that holds your money for a fixed period of time with a fixed APY (Annual Percentage Yield). Personal CDs at Live Oak are FDIC insured up to $250,000 per depositor, per ownership, the same as savings and checking accounts.
What are the FDIC Insurance Limits?
The FDIC insures up to $250,000 per depositor, per insured bank, for each account ownership category, meaning your coverage can exceed $250,000 if you hold multiple ownership categories at the same bank. As a consumer, there’s a strategy to maximize your FDIC insurance coverage by opening accounts in different ownership categories.
| Single Accounts (owned by one person) |
$250,000 per owner |
| Joint Accounts (owned by more than one person) |
$250,000 per co-owner
|
| Accounts with Beneficiaries (also known as Trust Accounts) |
$250,000 per beneficiary |
| Certain Retirement Accounts |
$250,000 per owner |
If you have any questions about FDIC insurance and its coverage, please visit: https://www.fdic.gov/resources/deposit-insurance/understanding-deposit-insurance/
Real Life Examples with FDIC Insurance
- Single Person at One Bank: Say you have $150,000 across a personal checking and savings account (all in your name at one bank). Your entire $150,000 balance is covered since the total is under the $250,000 coverage limit for a single owner.
- Married Couple Using Two Banks: Imagine that a husband and wife use two banks. They each have a Personal CD within their respective banks, and they are both on one joint savings account with one of the banks. This allows for $1,000,000 coverage across all accounts since both the husband and wife are covered up to $250,000 for their Personal CDs, as well as another $250,000 each for their joint account.
- Married Couple Using One Bank: Say a married couple has a balance of $600,000 in a joint savings account at one bank. In this situation, the coverage is capped at $500,000 for this account since each joint owner is covered up to $250,000. This leaves $100,000 of the couple’s money uninsured.
- Single Business Owner: Most business owners tend to keep their personal deposits and their business deposits at separate banks. For example, a business savings account at Bank A is insured up to $250,000 and a personal savings account at Bank B is also insured up to $250,000 since they are at separate institutions even though owned by the same individual.
FREQUENTLY Asked Questions About FDIC Insurance
Does FDIC insurance cover $250,000 per account or per bank?
FDIC insurance covers up to $250,000 per depositor, per insured bank, per ownership category. In plain terms, it's not just about how many accounts you have. If you hold multiple accounts in the same ownership category at the same bank, those balances are typically combined when determining your coverage.
Does FDIC insurance cover $500,000 on a joint account?
FDIC insurance can cover up to $500,000 on a joint account with two eligible account owners. Because each co-owner may qualify for up to $250,000 in coverage, joint accounts often provide a higher level of protection than individual accounts. Understanding FDIC account insurance limits can help you make the most of your available coverage.
What happens if I have more than $250,000 in one bank account?
Deposits over $250,000 in a single ownership account may exceed FDIC bank account limits. While bank failures are rare, any funds above the insured amount may not be fully protected if a bank fails. If you're holding a large cash balance, it's a good idea to review your coverage and understand the current FDIC limit.
How can I insure more than $250,000 at one bank?
You can insure more than $250,000 at one bank by using ownership categories that qualify for separate FDIC coverage. For example, individual accounts, joint accounts, certain retirement accounts and some trust accounts may each receive separate insurance limits.
How to Get Started with FDIC Coverage at Live Oak Bank
When you open a deposit account with Live Oak Bank, your funds are automatically covered by FDIC insurance upon account opening. This ensures your deposits are safe without extra steps.
If you are looking to insure more than $350,000, we offer extended FDIC insurance coverage for up to $10 million.1
Have additional questions? Contact our Customer Success Team, available Monday through Friday 8:00 a.m. - 11:00 p.m. ET, at 866.518.0286.
Commitment to Our Customers
The examples above are simply to explain how FDIC coverage works and are not intended as financial planning advice – be sure to have a conversation with your own financial advisor. Did you know that you can get help with calculating your FDIC coverage? You can find out how much FDIC coverage you have by using the
EDIE calculator found on the FDIC’s website.
It’s important to note that not all banks have FDIC insurance, so be sure to ask before you open a deposit account. Check to see if your bank has coverage on the FDIC’s website
.
Live Oak is committed to keeping your assets safe and we’ll work with you to maximize your FDIC insurance coverage, or set up an insured cash sweep1, depending on your needs.
Member FDIC.
1. Deposit placement through an IntraFi service is subject to the terms, conditions, and disclosures in applicable agreements. Deposits that are placed through an IntraFi service at FDIC-insured banks in IntraFi’s network are eligible for FDIC deposit insurance coverage at the network banks. The depositor may exclude banks from eligibility to receive its funds. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA before settlement for deposits or after settlement for withdrawals. The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through an IntraFi service satisfies any restrictions on its deposits. IntraFi and IntraFi Cash Service are registered service marks of IntraFi LLC.
